MILWAUKEE, Jan. 18 /PRNewswire/ -- Johnson Controls, Inc. (NYSE: JCI) today reported record sales and net income for the three months ended December 31, 1993.
Sales for the first quarter of fiscal 1994 rose 5% to $1,585.0 million from $1,511.3 million for the first quarter of fiscal 1993. Operating income increased to $81.6 million, up 7% from $76.5 million for the prior year while lower interest expense and increased income from equity affiliates helped income before the cumulative effect of accounting changes to increase 17% to $38.1 million in the fiscal 1994 quarter from $32.7 million for the prior year. Fully diluted earnings per share before the cumulative effect of accounting changes were $.83 versus $.71 for the prior year.
Johnson Controls said that its automotive seating business sales were higher than a year ago and that operating income also increased as strength in the North American market more than offset substantially weaker market conditions in Europe. The company said that its improved results in North America reflect the higher industry vehicle production volume and Johnson Controls' participation in popular vehicle models. It said the company's European automotive sales declined as the reductions in demand more than offset the addition of sales from new programs, such as those associated with Volkswagen in Spain and Toyota in the United Kingdom. Johnson Controls also said that its engineering investments aimed at the development of new seating products were much higher than in the first quarter of 1993.
Facility services and control systems sales were up over the quarter a year ago. As expected, operating income declined from the 1993 results, which were boosted by earnings from a large international contract. In North America, sales to the commercial buildings market were higher, led by increasing sales of facility management services. International sales declined, reflecting recessionary conditions in Europe. Johnson Controls said that worldwide orders from the commercial buildings market were higher on the strength of North American bookings in the retrofit and construction markets. The company noted that this quarter was the fourth consecutive period in which it had recorded double-digit increases in domestic construction orders, signalling an upturn in overall commercial construction activity.
Johnson Controls stated that battery sales in the quarter declined despite higher unit shipments as the result of lower lead prices. Operating income increased over the prior year reflecting the higher unit volume, operating efficiencies and increased sales of its premium Energizer brand products.
The company said that sales and operating income from its plastics business increased over the prior year due to higher domestic demand for plastic bottles. The company said that shipments of its hot-fillable bottles for juices and other beverages were substantially above the year ago level while demand from water markets were exceeding capacity. In the soft drink market, sales also exceeded the prior year although price decreases moderated the impact of the demand.
According to Chairman and Chief Executive Officer James H. Keyes, the results for the first quarter of fiscal 1994 were in line with company expectations. "We continue to believe that strength in our North American markets should enable us to overcome continuing weakness in European demand. As a result, we anticipate 1994 becoming another year of record results for Johnson Controls," Mr. Keyes said.
CONSOLIDATED STATEMENT OF INCOME
(In millions, except per share; unaudited)
For the Three Months
Ended December 31,
1993 1992
Net sales $1,585.0 $1,511.3
Cost of sales 1,332.4 1,287.6
Gross profit 252.6 223.7
Selling, general and administrative
expenses 171.0 147.2
Operating income 81.6 76.5
Interest income 0.9 1.8
Interest expense (10.6) (13.4)
Miscellaneous - net 1.4 (2.8)
Other income (expense) (8.3) (14.4)
Income before income taxes, minority
interests and cumulative effect of
accounting changes 73.3 62.1
Provision for income taxes 31.5 26.2
Minority interests in net earnings
of subsidiaries(A) 3.7 3.2
Income before cumulative effect of
accounting changes $38.1 $32.7
Cumulative effect of accounting changes,
net of income taxes(B) -- ($122.0)
Net income (loss) $38.1 ($89.3)
Earnings (loss) available for common
shareholders $35.8 ($91.6)
Earnings per share before cumulative
effect of accounting changes(C)
Primary $0.87 $0.74
Fully diluted $0.83 $0.71
Earnings (loss) per share(C)
Primary $0.87 ($2.25)
Fully diluted $0.83 ($2.25)(D)
For the Three Months
Ended December 31,
Weighted Average Shares 1993 1992
(in millions)
Primary 41.0 40.5
Fully diluted 44.3 44.1
(A) -- The company changed its presentation of minority interests in subsidiaries and as a result, has reclassified prior year cost of sales, gross profit, operating income and income before tax amounts.
(B) -- The company adopted Statement of Financial Accounting Standards (SFAS) No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," No. 109, "Accounting for Income Taxes," and No. 112, "Employers' Accounting for Postemployment Benefits" effective October 1, 1992. The combined cumulative effect of the accounting changes was a one time charge of $122 million, or $2.99 per share on a primary basis and $2.81 per share fully diluted, after taxes.
(C) -- Primary earnings per share are computed by dividing net income, after deducting dividend requirements on the Series D Convertible Preferred Stock, by the weighted average number of common shares and common stock

equivalents which would arise from the exercise of stock options.
Fully diluted earnings per share assume the conversion of the
Company's Series D Convertible Preferred Stock, if dilutive, plus
the dilutive effect of the stock options.